ResortQuest International, Inc. (NYSE: RZT), the first branded company providing vacation rental and property management services in premier resort destinations throughout North America, today announced pro forma results for the third quarter and nine months ended September 30, 1998. Results in this press release are initially stated exclusive of the major acquisition of Abbott Resorts, which occurred on September 30 and was not included in most analysts` estimates.
Excluding the Abbott Resorts acquisition, pro forma net income for the third quarter was $1.7 million, up 11.1 percent, on a 21.7 percent increase in revenues to $16.9 million. Pro forma net income per share was 11 cents, which exceeded by one cent consensus analyst estimates. Pro forma results presented in the remainder of this release include the Abbott Resorts acquisition.
``In addition to the Abbott Resorts acquisition in Destin, Fla., we also acquired in the third quarter Plantation Resort in Gulf Shores, Alabama (August 31), which together with Abbott Resorts increased our inventory of vacation rentals by 27 percent to more than 13,000 units,`` said David Sullivan, chairman and chief executive officer. ``Our earnings typically have been concentrated in the first quarter, but we expect these acquisitions to smooth our earnings over the first three quarters of the year. We continue to have an aggressive appetite for acquisitions and are in active negotiations with several companies.``
Sullivan said that consumer response to the ResortQuest brand continues to grow and that the company has seen a steady rise in repeat bookings. ``The introduction of our QuestClub program, an exclusive travel benefits program for ResortQuest`s homeowners that allows them to receive substantial savings on vacation home and condominium rentals, will give us a significant competitive edge in renewing existing contracts and attracting new ones.``
Pro Forma Results Including Abbott Resorts Acquisition
To provide better comparability, the statements of income for the three-and nine-month periods ended September 30, 1997 and 1998 include the financial results of the founding companies and Abbott Resorts as if the combinations had occurred January 1, 1997. These results can be reviewed in the accompanying combined statements of pro forma income.
For the 1998 third quarter, including both acquisitions, pro forma net income was $3.5 million, up from pro forma net income of $3.4 million for the same period in 1997, on a 15 percent increase in pro forma revenues to $28.4 million. Pro forma net income per diluted share was 21 cents, up from pro forma net income of 20 cents per diluted share in the third quarter of 1997. The 1998 results include a one-time charge of $134,000 related to the acquisition of Plantation Resort Management and the incremental expenses associated with being a public company and corporate overhead.
Pro forma revenue per available unit (RevPAU) based on the company`s portfolio of 11,337 vacation property units operated for the 1998 third quarter advanced 4.5 percent to $88.49 from $84.69. Occupancy was down 1.2 percentage points to 65.8 percent and average daily rate (ADR) rose 6.3 percent to $134.41. The company`s statistics exclude 1,330 home and condominium units not under exclusive rental agreements and 378 for Plantation Resorts.
``We had a strong quarter operationally in our Beach segment, which was up 10.3 percent in RevPAU over the prior year`s third quarter,`` said David Levine, president and chief operating officer. ``Our Hawaii segment, which was primarily impacted by the Northwest Airlines strike and the continued pressure from the Asian economic crisis, was off 3.5 percent in RevPAU. The repositioning of our Hawaii wholesaling business to concentrate more heavily on U.S. inbound markets has enabled ResortQuest to outperform other major Hawaiian lodging companies. Our Mountain segment, which traditionally is slow during the summer months, showed improvement primarily due to higher real estate sales.``
``ResortQuest and its homeowners are already taking advantage of the economies of scale and purchasing power that our greater size brings,`` Levine added. ``We expect to see these synergistic benefits increase as we move forward.``
ResortQuest currently is negotiating to increase its credit facility for general corporate purposes, including acquisitions. ``We are well ahead of our acquisition plan, resulting in higher cash needs,`` said Jeff Jarvis, chief financial officer. ``We recently received clearance from the Securities and Exchange Commission on our post-effective amendment to the 3 million common share shelf registration statement, which was required as a result of the magnitude of the Abbott acquisition.``
For the first nine months of 1998, pro forma net income, including the Abbott Resorts acquisition, advanced 8 percent to $8.9 million, or 52 cents per diluted share, compared to $8.2 million, or 49 cents per diluted share, for the first nine months of 1997. Pro forma total revenues increased to $76.3 million, up 12 percent from pro forma total revenues of $68.2 million in 1997.
Because of the recent formation of the company and the required accounting treatment of its founding acquisitions, pro forma results most accurately reflect the financial status of the company. ResortQuest historical consolidated financial information for the three- and nine-month periods ended September 30, 1998 and 1997 includes the results of Aston Hotels & Resorts prior to the founding acquisitions and the company`s initial public offering and the combined balances and transactions of ResortQuest and the founding companies only since May 26, 1998. Comparability of actual results for the quarter, year-to-date and prior years may be misleading and are not necessarily indicative of the results of the combined operations. As a consequence, historical results are not included in this press release.
ResortQuest provides the first one-stop resource for renting vacation homes and condominiums in premier resort destinations. ResortQuest`s current locations include Gulf Shores, Ala.; Aspen, Breckenridge and Telluride, Colo.; Bethany Beach, Del.; Captiva Island, Destin, Ft. Walton and Sanibel Island, Fla.; St. Simons Island, Ga.; Hawaii, Maui, Oahu, and Kauai, Hawaii; Nantucket, Mass.; the Outer Banks of North Carolina; Park City, Utah; and Whistler, British Columbia.
ResortQuest maintains corporate offices in Memphis, Tenn. The company`s website address is www.resortquest.com.